Brent Oil Extends Advance Toward $60 on Tightening Global Supply By Bloomberg

© Reuters. Brent Oil Extends Advance Toward $60 on Tightening Global Supply

(Bloomberg) — Oil extended gains toward $60 a barrel in early Asian trading as global supplies tighten and the demand outlook improves with the rollout of Covid-19 vaccines.

Futures in London climbed 0.8% after capping a third weekly gain. The number of vessels sailing toward China jumped to a six-month high on Friday, signaling robust demand from the world’s largest importer. Key prompt timespreads for the global benchmark and have recently firmed in a bullish backwardation structure, indicating shrinking stockpiles.

See also: Oil’s Remarkable Rebound From a Year of Catastrophe

Top independent trader Vitol SA, meanwhile, joined with rival Gunvor Group Ltd. in expressing caution about the recent surge in prices, while a technical indicator is showing that oil is overbought and due for a correction.

Oil has rallied about 60% since the end of October amid coronavirus vaccine breakthroughs and after Saudi Arabia pledged to deepen output cuts. There are still concerns about near-term demand, with a new virus variant spreading in the U.S. and other regions across the world grappling with lockdowns.

Brent’s prompt timespread was 27 cents in backwardation — where near-dated prices are more expensive than later-dated ones — compared with a 7-cent contango at the start of the year.

©2021 Bloomberg L.P.

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